Exhibit 1.A.5(a)(iii)
SOUTHLAND LIFE INSURANCE COMPANY
(A TEXAS CORPORATION)
5780 POWERS FERRY ROAD, N.W. ATLANTA, GEORGIA 30327-4390
MAILING ADDRESS
P.O. BOX 105006 ATLANTA, GEORGIA 30348-5006
A STOCK COMPANY - ESTABLISHED 1908
JOHN Q. DOE AND MARY J. DOE
08 0002 3435
AGREEMENT BY SOUTHLAND LIFE INSURANCE COMPANY
Southland Life Insurance Company will pay the benefits described in this policy
in accordance with the terms of this policy. No benefit is payable under this
policy on the death of the first insured, except as provided by rider, if
attached. However, you should give us notice of the first death at the time it
occurs.
PLEASE READ YOUR POLICY CAREFULLY
This policy is a legal contract between you as owner of the policy and the
company.
RIGHT TO EXAMINE THIS POLICY
You have the right to examine and return this policy. You may return it by mail
or other delivery to the agent who sold it to you or to our Home Office within
10 days after you receive it. It will then be void from the beginning. Upon
return of the policy, we will refund all premiums paid. If this policy is a
replacement policy as defined by state law where this policy is delivered, you
have the right to examine and return this policy within 10 days.
This policy is signed for Southland Life Insurance Company by
THIS POLICY IS A LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.
THIS POLICY INCLUDES PERSISTENCY BONUS. THIS IS A NON-PARTICIPATING POLICY.
Death benefits and other values provided by this contract, when based on the
investment experience of a separate account, are variable. These values may
increase or decrease, based on investment experience and are not guaranteed as
to a fixed dollar amount. Death benefits are payable by us upon the second death
of the two insureds. There is no maturity date. Flexible premiums are payable by
you during the lifetime of either insured until the policy anniversary nearest
the younger insured's 100th birthday.
Policy Form 15287-00
<PAGE>
TABLE OF CONTENTS
SCHEDULE.......................................................................4
DEFINITIONS ...................................................................5
INSURANCE COVERAGE PROVISIONS..................................................6
EFFECTIVE DATE..........................................................6
BASE DEATH BENEFIT......................................................6
CHANGE IN REQUESTED INSURANCE COVERAGE..................................6
Requested Increases in Coverage..................................6
Requested Decreases in Coverage..................................7
Death Benefit Option Changes.....................................7
CONTINUATION OF COVERAGE BEYOND AGE 100.................................7
PAYOUT OF PROCEEDS......................................................8
PREMIUM PROVISIONS.............................................................9
PLANNED PREMIUMS........................................................9
UNPLANNED PREMIUMS......................................................9
PREMIUM LIMITATION .....................................................9
FAILURE TO PAY PREMIUM .................................................9
INITIAL PREMIUM ALLOCATION..............................................9
SUBSEQUENT PREMIUM ALLOCATIONS..........................................9
CHANGES TO PREMIUM ALLOCATIONS..........................................9
SEPARATE ACCOUNT PROVISIONS ..................................................10
THE SEPARATE ACCOUNT...................................................10
SEPARATE ACCOUNT DIVISIONS ............................................10
CHANGES WITHIN THE SEPARATE ACCOUNT....................................10
GENERAL ACCOUNT PROVISIONS....................................................11
THE GENERAL ACCOUNT....................................................11
GUARANTEED INTEREST ACCOUNT............................................11
LOAN DIVISION..........................................................11
TRANSFER PROVISIONS...........................................................11
ACCOUNT VALUE PROVISIONS......................................................12
ACCOUNT VALUES ON THE INVESTMENT DATE..................................12
ACCUMULATION UNIT VALUE................................................12
ACCUMULATION EXPERIENCE FACTOR.........................................12
ACCOUNT VALUE OF THE DIVISIONS OF THE SEPARATE ACCOUNT.................13
ACCOUNT VALUE OF THE GUARANTEED INTEREST ACCOUNT.......................13
ACCOUNT VALUE OF THE LOAN DIVISION.....................................13
MONTHLY DEDUCTION AND REFUND..................................................14
MONTHLY DEDUCTION .....................................................14
COST OF INSURANCE .....................................................14
PERSISTENCY REFUND.....................................................15
Form 15287-00 2
<PAGE>
LOAN PROVISIONS ..............................................................15
POLICY LOANS ..........................................................15
Preferred Policy Loans.............................................15
LOAN INTEREST .........................................................16
LOAN DIVISION .........................................................16
PARTIAL WITHDRAWAL PROVISIONS ................................................16
SURRENDER PROVISIONS..........................................................17
SURRENDER VALUE........................................................17
SURRENDER CHARGES......................................................17
BASIS OF COMPUTATIONS..................................................18
FULL SURRENDERS........................................................18
GRACE PERIOD, TERMINATION AND REINSTATEMENT PROVISIONS........................18
GRACE PERIOD...........................................................18
SPECIAL CONTINUATION PERIOD............................................19
GUARANTEE PERIOD.......................................................19
TERMINATION............................................................20
REINSTATEMENT..........................................................20
DEFERRAL OF PAYMENT....................................................20
GENERAL POLICY PROVISIONS.....................................................21
THE POLICY.............................................................21
CONTRACT CHANGES.......................................................21
PROCEDURES.............................................................21
OWNERSHIP..............................................................21
BENEFICIARIES..........................................................22
EXCHANGE RIGHT.........................................................22
POLICY SPLIT...........................................................22
COLLATERAL ASSIGNMENT..................................................23
INCONTESTABILITY.......................................................23
MISSTATEMENT OF AGE OR GENDER..........................................24
SUICIDE EXCLUSION......................................................24
PERIODIC REPORTS.......................................................24
ILLUSTRATION OF BENEFITS AND VALUES....................................24
NONPARTICIPATING.......................................................24
CUSTOMER SERVICE CENTER................................................24
PAYOUTS OTHER THAN AS ONE SUM.................................................25
ELECTION...............................................................25
PAYOUT OPTIONS.........................................................25
CHANGE AND WITHDRAWAL..................................................25
EXCESS INTEREST........................................................26
MINIMUM AMOUNTS........................................................26
SUPPLEMENTARY POLICY...................................................26
INCOME PROTECTION......................................................26
DEATH OF PRIMARY PAYEE.................................................26
PAYMENTS OTHER THAN MONTHLY............................................26
SETTLEMENT OPTION TABLES......................................................27
Any supplementary amendments or endorsements, and a copy of the application
follow the final policy provisions and are to be considered part of the Policy.
Policy Form 15287-00 3
<PAGE>
SCHEDULE
(Schedule Effective Date: November 1, 2000)
POLICY NUMBER 08 0002 3435
POLICY DATE NOVEMBER 1, 2000
INSURED (1) JOHN Q. DOE
AGE/GENDER 35 MALE
PREMIUM CLASS: STANDARD NONTOBACCO
RATING FACTOR: 1.00
EXTRA PREMIUM FOR PREMIUM CLASS $XX.XX PER MONTH FOR X MONTHS
INSURED (2) MARY J. DOE
AGE/GENDER 35 FEMALE
PREMIUM CLASS: STANDARD NONTOBACCO
RATING FACTOR: 1.00
EXTRA PREMIUM FOR PREMIUM CLASS $XX.XX PER MONTH FOR X MONTHS
JOINT EQUIVALENT AGE 35
INITIAL STATED DEATH BENEFIT $100,000
ADJUSTABLE TERM INSURANCE $150,000*
DEATH BENEFIT
TARGET DEATH BENEFIT $250,000**
ADDITIONAL BENEFITS:
SINGLE LIFE TERM INSURANCE RIDER INS#1 $100,000***
SINGLE LIFE TERM INSURANCE RIDER INS#2 $100,000***
DEATH BENEFIT OPTION A
MONTHLY PROCESSING DATE 1ST
PREMIUM PAYMENT FREQUENCY AT ISSUE ANNUAL
SCHEDULED PERIODIC PREMIUM $2000.00
MINIMUM ANNUAL PREMIUM $717.00
[GUARANTEE PERIOD ANNUAL PREMIUM] [$xxx.xx]
DEFINITION OF LIFE INSURANCE TEST GUIDELINE PREMIUM TEST
Coverage will expire if premiums are insufficient to continue coverage. Coverage
will also be affected by partial withdrawals, policy loans, changes in the
current cost of insurance rates and the investment experience of the funds of
the Separate Account.
*This amount is the amount of adjustable term death benefit on the policy date.
This death benefit will vary from time to time, and may depend on your account
value. See the rider and policy for details.
**This amount is the target death benefit on the policy date. It may change at
the beginning of each policy year. See the Schedule and rider for details.
***This is the amount of single life term death benefit on the policy date. This
death benefit may change at the beginning of each policy year. See the rider and
Schedule for details.
CUSTOMER SERVICE CENTER: P.O. Box 173789, Denver, Colorado 80217-3789
Toll Free Number 1-800-224-3035
Policy Form 15287-00 4
<PAGE>
SCHEDULE (CONTINUED)
SEGMENT BENEFIT PROFILE
SCHEDULE EFFECTIVE DATE: [NOVEMBER 1,2000]
DESCRIPTION SEGMENT STATED SEGMENT SEGMENT SEGMENT
DEATH BENEFIT EFFECTIVE TARGET PREMIUM
AMOUNT DATE PREMIUM CLASS
Segment #1 $100,000 11/1/00 $410.06 Ins(1) M, NT
Ins(2) F, NT
ADDITIONAL BENEFITS
Adjustable Term Insurance Rider premium class or rating is the same as Segment
#1
Single Life Term Rider for Insured #1 premium class or rating is
Single Life Term Rider for Insured #2 premium class or rating is
A segment is a block of death benefit coverage. The stated death benefit shown
on the schedule page at issue is Segment #1. Additional segments may be added to
the policy after issue to increase the death benefit. Each individual segment
added to the policy has its own cost of insurance charges as shown in the
Schedule. This is further defined in the Definition of Terms section of your
policy.
Form 15287-00 4A
<PAGE>
SCHEDULE (Continued)
EXPENSE CHARGES
PREMIUM EXPENSE CHARGES
Premium Tax 2.5% of each Premium
Federal Deferred Acquisition Costs 1.5% of each Premium
We reserve the right to increase or decrease the premium expense charge
for taxes due to any change in tax law. We further reserve the right to
increase or decrease the premium expense charge for the federal income
tax treatment of deferred acquisition costs due to any change in the
cost to us.
Guaranteed Maximum Sales Charge
Segment Premium Paid Segment Premium Paid
Up to Segment Target in Excess of Segment
Premium Target Premium
Segment Years 1-10 4.0% 2.0%
Segment Years 11 and beyond 2.0% 2.0%
GUARANTEED MAXIMUM MONTHLY ADMINISTRATIVE EXPENSE CHARGES
Per Policy Charge: $15 per month for the first 120 policy months
$9 per policy month thereafter
Monthly
Administrative Charge: $0.085 per unit for the first 120 policy months
$0.015 per unit for policy months 121 through 240.
Unit is the greater of stated death benefit or target death benefit
then in force for the policy, divided by 1000.
ANNUAL MORTALITY AND EXPENSE RISK CHARGE
ANNUAL MORTALITY AND EXPENSE RISK CHARGE: 0.90% (0.002466% per day)
Policy Form 15287-00 4B
<PAGE>
SCHEDULE (Continued)
POLICYHOLDER TRANSACTION CHARGES
Policy Illustrations $25 for each illustration after the
1st in a policy year.
Partial Withdrawal Service Fee See below.
POLICY LOANS
Policy Loan Interest Rate 6.00%
Preferred Loan Interest Rate 4.00%
Guaranteed Interest Rate Credited to 4.00%
Loan Division
Minimum Loan Amount $100
Maximum Loan Amount See Loan Provisions section
PARTIAL WITHDRAWALS
Minimum Partial Withdrawal Amount $100
Maximum Partial Withdrawal Amount Amount which will leave $500 as the
net cash surrender value
Partial Withdrawal Service Fee Lesser of $25 or 2% of the
withdrawal amount for each
withdrawal in a policy year
Limit on Partial Withdrawals Twelve (12) in a policy year.
GUARANTEED INTEREST DIVISION
Guaranteed Interest Rate for
Guaranteed Interest Division 3.00%
PERSISTENCY REFUND FACTOR
Persistency Refund Factor: .000375 monthly
Policy Form 15287-00 4C
<PAGE>
SCHEDULE (Continued)
SURRENDER CHARGES
TOTAL SURRENDER CHARGE TABLE
The surrender charges pertaining to the insurance coverage shown in the Schedule
are shown in the following table. This table may change upon any increase or
decrease in the policy's stated death benefit.
------------------------------- -----------------------------
Surrender During the Segment #1
Policy Year Ending Total Surrender Charge
------------------------------- -----------------------------
2001 $630.96
------------------------------- -----------------------------
2002 $630.96
------------------------------- -----------------------------
2003 $630.96
------------------------------- -----------------------------
2004 $630.96
------------------------------- -----------------------------
2005 $630.96
------------------------------- -----------------------------
2006 $577.86
------------------------------- -----------------------------
2007 $524.77
------------------------------- -----------------------------
2008 $471.67
------------------------------- -----------------------------
2009 $418.58
------------------------------- -----------------------------
2010 $365.48
------------------------------- -----------------------------
2011 $312.38
------------------------------- -----------------------------
2012 $259.29
------------------------------- -----------------------------
2013 $206.19
------------------------------- -----------------------------
2014 $143.10
------------------------------- -----------------------------
2015 $0.00
------------------------------- -----------------------------
Surrender charges for each coverage segment reach zero at the beginning of the
fifteenth policy year. Surrender charges shall not exceed the applicable amount
shown in this table.
Policy Form 15287-00 4D
<PAGE>
SCHEDULE ( CONTINUED)
The policy's base death benefit at any time will be at least equal to the
account value times the appropriate factor from this table.
DEFINITION OF LIFE INSURANCE
GUIDELINE PREMIUM TEST/CASH VALUE CORRIDOR TEST
DEATH BENEFIT FACTORS
----------------------- ------------- -------------------- -------------
Younger Factor Younger Factor
Insured's Insured's
Attained Age Attained Age
----------------------- ------------- -------------------- -------------
0-40 2.50
----------------------- ------------- -------------------- -------------
----------------------- ------------- -------------------- -------------
41 2.43 71 1.13
----------------------- ------------- -------------------- -------------
42 2.36 72 1.11
----------------------- ------------- -------------------- -------------
43 2.29 73 1.09
----------------------- ------------- -------------------- -------------
44 2.22 74 1.07
----------------------- ------------- -------------------- -------------
45 2.15 75 1.05
----------------------- ------------- -------------------- -------------
----------------------- ------------- -------------------- -------------
46 2.09 76 1.05
----------------------- ------------- -------------------- -------------
47 2.03 77 1.05
----------------------- ------------- -------------------- -------------
48 1.97 78 1.05
----------------------- ------------- -------------------- -------------
49 1.91 79 1.05
----------------------- ------------- -------------------- -------------
50 1.85 80 1.05
----------------------- ------------- -------------------- -------------
----------------------- ------------- -------------------- -------------
51 1.78 81 1.05
----------------------- ------------- -------------------- -------------
52 1.71 82 1.05
----------------------- ------------- -------------------- -------------
53 1.64 83 1.05
----------------------- ------------- -------------------- -------------
54 1.57 84 1.05
----------------------- ------------- -------------------- -------------
55 1.50 85 1.05
----------------------- ------------- -------------------- -------------
----------------------- ------------- -------------------- -------------
56 1.46 86 1.05
----------------------- ------------- -------------------- -------------
57 1.42 87 1.05
----------------------- ------------- -------------------- -------------
58 1.38 88 1.05
----------------------- ------------- -------------------- -------------
59 1.34 89 1.05
----------------------- ------------- -------------------- -------------
60 1.30 90 1.05
----------------------- ------------- -------------------- -------------
----------------------- ------------- -------------------- -------------
61 1.28 91 1.04
----------------------- ------------- -------------------- -------------
62 1.26 92 1.03
----------------------- ------------- -------------------- -------------
63 1.24 93 1.02
----------------------- ------------- -------------------- -------------
64 1.22 94 1.01
----------------------- ------------- -------------------- -------------
65 1.20 95 1.00
----------------------- ------------- -------------------- -------------
----------------------- ------------- -------------------- -------------
66 1.19 96 1.00
----------------------- ------------- -------------------- -------------
67 1.18 97 1.00
----------------------- ------------- -------------------- -------------
68 1.17 98 1.00
----------------------- ------------- -------------------- -------------
69 1.16 99 1.00
----------------------- ------------- -------------------- -------------
70 1.15 100 and older 1.00
----------------------- ------------- -------------------- -------------
----------------------- ------------- -------------------- -------------
Form 15287-00 4E
<PAGE>
SCHEDULE ( CONTINUED)
TABLE OF GUARANTEED RATES-SEGMENT #1
Guaranteed Maximum Cost of Insurance Rates Per $1000 of Net Amount at Risk
(These rates apply to the Base Policy.)
<TABLE>
<CAPTION>
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
Segment Year Monthly Cost of Segment Year Monthly Cost of Segment Year Monthly Cost of
Insurance Rate Insurance Rate Insurance Rate
<S> <C> <C> <C> <C> <C>
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
0 0.00029 29 0.44922 58 21.07894
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
1 0.00094 30 0.52778 59 23.37773
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
2 0.00174 31 0.61724 60 26.51949
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
3 0.00270 32 0.71747 61 31.35742
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
4 0.00390 33 0.82806 62 39.59830
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
5 0.00537 34 0.95316 63 54.65492
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
6 0.00720 35 1.09872 64 83.33333
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
7 0.00937 36 1.27190 65
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
8 0.01195 37 1.48191 66
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
9 0.01498 38 1.73698 67
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
10 0.01858 39 2.04020 68
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
11 0.02272 40 2.39109 69
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
12 0.02754 41 2.78822 70
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
13 0.03315 42 3.22853 71
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
14 0.03974 43 3.71109 72
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
15 0.04741 44 4.24541 73
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
16 0.05649 45 4.84859 74
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
17 0.06725 46 5.53770 75
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
18 0.08016 47 6.33237 76
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
19 0.09527 48 7.24554 77
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
20 0.11272 49 8.26516 78
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
21 0.13268 50 9.37750 79
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
22 0.15492 51 10.56782 80
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
23 0.17972 52 11.82596 81
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
24 0.20783 53 13.14547 82
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
25 0.24032 54 14.52703 83
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
26 0.27881 55 15.97964 84
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
27 0.32514 56 17.52244 85
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
28 0.38176 57 19.19650 86
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
</TABLE>
The above Table of Guaranteed Rates is based on the 1980 U.S. Commissioner's
Standard Ordinary Sex Distinct Mortality Table. These rates include substandard
rates, if applicable.
Form 15287-00 4G
<PAGE>
SCHEDULE ( CONTINUED)
TABLE OF GUARANTEED RATES-SEGMENT #1
Guaranteed Maximum Cost of Insurance Rates Per $1000 of ATR Net Amount at Risk
(These rates apply to the ATR.)
<TABLE>
<CAPTION>
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
Segment Year Monthly Cost of Segment Year Monthly Cost of Segment Year Monthly Cost of
Insurance Rate Insurance Rate Insurance Rate
<S> <C> <C> <C> <C> <C>
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
0 0.00045 29 0.66277 58 26.52708
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
1 0.00147 30 0.77552 59 29.36692
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
2 0.00271 31 0.90279 60 33.26593
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
3 0.00422 32 1.04461 61 39.29025
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
4 0.00609 33 1.19968 62 49.56750
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
5 0.00838 34 1.37382 63 68.35812
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
6 0.01119 35 1.57540 64 83.33333
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
7 0.01456 36 1.81377 65
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
8 0.01854 37 2.10117 66
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
9 0.02323 38 2.44842 67
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
10 0.02877 39 2.85820 68
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
11 0.03512 40 3.32872 69
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
12 0.04249 41 3.85608 70
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
13 0.05109 42 4.43540 71
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
14 0.06113 43 5.06385 72
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
15 0.07280 44 5.75364 73
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
16 0.08662 45 6.52663 74
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
17 0.10289 46 7.40396 75
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
18 0.12238 47 8.40993 76
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
19 0.14506 48 9.55930 77
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
20 0.17122 49 10.83359 78
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
21 0.20104 50 12.21454 79
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
22 0.23408 51 13.68128 80
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
23 0.27080 52 15.22354 81
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
24 0.31217 53 16.83418 82
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
25 0.35980 54 18.51615 83
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
26 0.41600 55 20.28398 84
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
27 0.48342 56 22.16496 85
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
28 0.56560 57 24.21246 86
---------------- ----------------------- ------------- ------------------------ ------------- -----------------------
</TABLE>
The above Table of Guaranteed Rates is based on 125% of the 1980 U.S.
Commissioner's Standard Ordinary Sex Distinct Mortality Table. These rates
include substandard rates, if applicable.
Form 15287-00
<PAGE>
DEFINITIONS
ACCOUNT VALUE: The sum of the amounts allocated to the portfolios of the
Separate Account and to the Guaranteed Interest Division, as well as any amount
set aside in the Policy Loan Division
AGE/JOINT EQUIVALENT ISSUE AGE/YOUNGER INSURED'S BIRTH DATE:
AGE - The policy is issued at the ages shown in the Schedule. Each
issue age is the age nearest birthday on the policy date.
JOINT EQUIVALENT ISSUE AGE - This age is determined on the policy date.
The attained joint equivalent age is the joint equivalent issue age on
the policy date increased by the number of completed policy years.
YOUNGER INSURED'S BIRTH DATE - The younger insured's 100th birth date
is the date on which the younger of the two insured's reaches attained
age 100 or the date the younger insured would have reached attained age
100 if that insured dies before actually reaching that date. Any other
birth date of the younger insured is determined in the same manner. The
younger insured's attained age is the issue age of the younger of the
two insureds as shown in the Schedule, increased by the number of
completed policy years.
BASE DEATH BENEFIT: The base death benefit depends on the death benefit option
you choose. This is defined in the Base Death Benefit provision of the policy.
CASH SURRENDER VALUE: Cash surrender value on any valuation date is the account
value minus surrender charges, if any.
CUSTOMER SERVICE CENTER: The Southland Customer Service Center is the company's
offices at P.O. Box 173789, Denver, CO 80217-3789. For overnight delivery, the
address is 1290 Broadway, Denver, CO 80203.
FIRST DEATH: The first death is the death of the first to die of the two
insureds.
GENERAL ACCOUNT: The account which contains all of our assets other than those
held in a separate account.
GUARANTEED INTEREST DIVISION: Part of our General Account to which a portion of
the account value may be allocated and which provides guarantees of principal
and interest.
INITIAL PERIOD: The initial period ends on the earlier of: (a) the date this
policy was delivered to you plus the Right to Examine Period, so long as we
receive notice of the delivery date at our Customer Service Center before the
date defined in (b), or (b) the date this policy is mailed from our Customer
Service Center plus 5 days plus the Right to Examine Period.
INVESTMENT DATE: The first date we apply your net premium payment to your
policy. We will allocate the initial net premium to your policy at the end of
the valuation period during which the latest of the following requirements is
satisfied:
1) we receive the amount of premium required for coverage to begin under the
policy;
2) we have approved the policy for issue, and
3) all issue requirements have been met and received in our Customer Service
Center.
LOAN DIVISION: Part of our General Account in which funds are set aside to
secure any outstanding policy loan and accrued loan interest when due.
Policy Form 15287-00 5
<PAGE>
MONTHLY PROCESSING DATE: The date each month on which the monthly deductions
from the account value are due. The first monthly processing date will be the
policy date or the date on which the initial net premium is allocated to your
policy, if later. Subsequent monthly processing dates will be the same date as
the policy date each month thereafter. If that date is not a valuation date,
monthly processing will use the next calculated accumulation unit value.
NET ACCOUNT VALUE: The amount of the account value minus any policy loan and
accrued loan interest.
NET PREMIUM: The premium amount paid minus the premium expense charges shown in
the Schedule. These charges are deducted from each premium before the premium is
applied to your account value.
PARTIAL WITHDRAWAL: The withdrawal of a portion of your cash surrender value
from the policy. The partial withdrawal may reduce the amount of base death
benefit in force, which in turn may cause a surrender charge to be incurred.
POLICY LOAN: The sum of amounts you have borrowed from your policy, increased by
any policy loan interest capitalized when due, and reduced by any policy loan
repayments.
PORTFOLIOS OF THE SEPARATE ACCOUNT: The investment options available, each of
which invests in shares of one of the portfolios.
RIGHT TO EXAMINE PERIOD: The number of days after delivery during which you have
the right to examine your policy. See the cover page of your policy for a
description of your right to examine period.
SCHEDULED PREMIUM: The premium amount that you specify on the application as the
amount you intend to pay at fixed intervals over a specified period of time.
Premiums may be paid monthly, quarterly, semiannual, or annually, as you
determine. You need not pay the scheduled premium and you may change it at any
time. Also, within limits, you may pay less or more than the scheduled premium.
SECOND DEATH: The second death is the death of the second to die of the two
insureds.
SEGMENT: The stated death benefit shown on the Segment Benefit Profile of the
Schedule is the initial segment, or Segment #1. Each increase in the stated
death benefit (other than due to an option change) is a new segment. Each new
segment will be shown separately on the Segment Benefit Profile of the Schedule.
The first year for a segment begins on the effective date of the segment and
ends one year later. Each new segment may be subject to a new minimum annual
premium, new sales charge, new surrender charges, new cost of insurance charges
and new incontestability and suicide exclusion periods.
STATED DEATH BENEFIT: The sum of the segments under the policy. The stated death
benefit changes when there is an increase or a decrease or when a transaction on
the policy causes it to change (for example, a partial withdrawal under an
Option A base death benefit may cause the stated death benefit to change).
SURRENDER CHARGE: The charge made against your account value in the event of
surrender, policy lapse, requested reductions in the stated death benefit, or
certain partial withdrawals.
Policy Form 15287-00 5A
<PAGE>
TARGET DEATH BENEFIT: The target death benefit for your policy is defined in the
Adjustable Term Insurance Rider, if any, attached to the policy.
VALUATION DATE: Each date as of which the net asset value of the shares of the
portfolio and unit values of the divisions are determined. Except for days that
a division's corresponding portfolio does not value its shares, a valuation date
is any day:
(a) The New York Stock Exchange (NYSE) is open for trading and on which
Southland Life's Customer Service Center is open for business; or
(b) as may be required by law.
VALUATION PERIOD: The period which begins at 4:00 p.m. Eastern Time on a
valuation day and ends at 4:00 p.m. Eastern Time on the next succeeding
valuation date.
Form 15287-00 5B
<PAGE>
INSURANCE COVERAGE PROVISIONS
POLICY DATE
The policy date shown in the Schedule is the effective date for all coverage
provided in the original application. The policy date is the date from which we
measure policy years and determine the monthly processing date. The first
monthly processing date is the investment date. Future monthly processing dates
are the same calendar day of each month as the policy date unless this is not a
valuation date in which case the monthly processing date occurs on the next
valuation date. A policy anniversary occurs each year on the same month and day
as the policy date unless this is not a valuation date in which case the policy
anniversary occurs on the next valuation date. The effective date for new
segments and additional benefits is shown in the Schedule.
BASE DEATH BENEFIT
The base death benefit will be determined, at any time, as follows:
Option 1: Under Option A, the base death benefit is the greater of:
(a) The stated death benefit; or
(b) The account value multiplied by the appropriate factor from the Death
Benefit Factors shown in the Schedule
Option 2: Under Option B, the based death benefit is the greater of:
(a) The stated death benefit plus the account value; or
(b) The account value multiplied by the appropriate factor from the Death
Benefit Factors shown in the Schedule
The stated death benefit and the death benefit type are shown in the Schedule.
This policy is designed to qualify as a life insurance contract under the
Internal Revenue Code. All terms and provisions of the policy shall be construed
in a manner consistent with that design. The base death benefit in force at any
time shall not be less than the amount of insurance necessary to achieve such
qualification under the applicable provisions of the Internal Revenue Code in
existence at the time the policy is issued. We reserve the right to amend the
policy or adjust the amount of insurance when required. We will send you a copy
of any policy amendment.
CHANGE IN REQUESTED INSURANCE COVERAGE
You may request that the insurance coverage be increased or decreased. Decreases
are not allowed before the first policy anniversary. The change in coverage may
not be for an amount less than $1,000. The effective date of the change will be
the monthly processing date immediately following the date your written
application is approved by us. After any change to the stated death benefit, you
will receive an amended Schedule reflecting the change, the benefit under any
riders, if applicable, the guaranteed cost of insurance rates, the new target
premium and the new surrender charge.
REQUESTED INCREASES IN COVERAGE
Subject to our limits, you may request an increase in the stated death benefit
through attained joint equivalent age 85. An increase will become effective as
of the monthly processing date immediately following the date your written
application is approved by us. You must provide evidence satisfactory to us that
the insureds are insurable according to our normal rules of underwriting for the
applicable premium class for this type of policy. This evidence will include an
application and may include required medical information. An increase will
consist of a new segment of stated death benefit. Each new
Form 15287-00 6
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segment will result in a new sales charge which will be deducted from the
premium allocated to the new segment. The new segment may also be subject to a
new minimum annual premium, new surrender charges, new per thousand of stated
death benefit charges, new cost of insurance charges and new incontestability
and suicide exclusion periods.
REQUESTED DECREASES IN COVERAGE
After the first policy anniversary, you may request a decrease in the stated
death benefit. We will limit the decrease such that, immediately after the
requested decrease:
a) The stated death benefit is at least $250,000 if there is no adjustable
term insurance on the policy.
b) If there is adjustable term insurance on the policy, the stated death
benefit is at least $100,000 and the target death benefit is at least
$250,000.
A decrease will be effective as of the monthly processing date immediately
following the date your written application is approved by us. A decrease will
first reduce Adjustable Term Insurance Rider coverage, if attached to your
policy, and will then reduce each of the stated death benefit segments in the
same proportion as the stated death benefit is reduced. A surrender charge will
apply if the stated death benefit is decreased and the decrease occurs during
the 14 years following the policy date or the date of the prior increase. If a
surrender charge applies, it will be deducted from your account value and future
surrender charges will be reduced.
DEATH BENEFIT OPTION CHANGES
Beginning with the first monthly processing date and ending with the policy
anniversary nearest the younger insured's 100th birth date, you may request to
change the death benefit option. This change will be effective as of the next
monthly processing date following approval. A death benefit option change
applies to the entire stated death benefit. We may not allow any change if it
would reduce the stated death benefit below the minimum we require to issue this
policy at the time of reduction. After the effective date of the change, the
stated death benefit will be changed according to the following table:
OPTION CHANGE
FROM TO STATED DEATH BENEFIT FOLLOWING THE OPTION CHANGE EQUALS:
Opt A Opt B Stated death benefit prior to such change minus your account
value as of the effective date of the change.
Opt B Opt A Stated death benefit prior to such change plus your account
value as of the effective date of the change.
To determine the segment stated death benefit after an option change, your
account value will be allocated to each segment in the same proportion that
segment bears to the stated death benefit as of the effective date of the
change.
CONTINUATION OF COVERAGE BEYOND AGE 100
If the policy is in force on the policy anniversary nearest the younger
insured's 100th birth date, the policy will continue pursuant to the terms of
the policy. On this date, the following will occur:
(a) If there is no Adjustable Term Insurance Rider on the policy, the
stated death benefit for the policy remains unchanged as of the policy
anniversary nearest the younger insured's 100th birthday. If there is
an Adjustable Term Insurance Rider attached to the policy, the stated
Form 15287-00 7
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death benefit for the policy will equal the target death benefit on the
policy anniversary nearest the younger insured's 100th birthday. Any
Adjustable Term Insurance Rider will then terminate.
(b) All other riders attached to the policy also will terminate.
(c) The portion of your account value invested in the portfolios of the
Separate Account will be transferred into the Guaranteed Interest
Division and no further investment in the divisions of the Separate
Account will be allowed.
(d) If the death benefit option in force on the policy is Option B, the
policy will be converted to death benefit Option A in accordance with
the procedures outlined in the Death Benefit Option Changes provision
of the policy. No further changes will be allowed to the death benefit
option
After the policy anniversary nearest the younger insured's 100th birth date, no
further premiums will be accepted and no monthly deductions will be made. We
will continue to credit interest to the account value in the Guaranteed Interest
Division. Policy loans and withdrawals continue to be available. Any existing
policy loan will continue. Policy loan interest will continue to accrue and if
not paid, may cause your policy to lapse. Payments on policy loans and policy
loan interest will be accepted. The policy will enter the 61-day grace period if
the net cash surrender value is zero or less.
If you do not want coverage to continue past the policy anniversary nearest the
younger insured's 100th birth date, the policy may be surrendered at that time,
or earlier.
PAYOUT OF PROCEEDS
Proceeds refer to the amount we will pay:
a) Upon surrender of the policy; or
b) Upon the second death of the two insureds.
The proceeds upon surrender of this policy will be the net cash surrender value.
The amount of proceeds payable upon the second death will be the base death
benefit in effect on the date of the second death, plus any amounts payable from
any additional benefits provided by rider, minus any outstanding policy loan
including accrued but unpaid interest, minus any unpaid monthly deductions
incurred prior to the date of the second death. The calculation of the death
proceeds will be computed as of the date of the second death. The second death
is the death of the second to die of the two insureds.
We will determine the amount of proceeds payable upon the second death when we
have received due proof of both deaths and any other information which is
necessary to process the claim. Any proceeds we pay are subject to adjustments
as provided in the Misstatement of Age or Gender, Suicide Exclusion and
Incontestability provisions.
We will pay proceeds in one sum unless you request an alternate form of payment.
There are many possible methods of payment. The available payout options are
described in the Payouts Other Than As One Sum provision. Contact us or your
registered representative for additional information. Interest will be paid on
the one sum death proceeds from the date of the second death to the date of
payment, or until a payout option is selected. Interest will be at the rate we
declare, or at any higher rate required by law.
Form 15287-00 8
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PREMIUM PROVISIONS
SCHEDULED PREMIUMS
The scheduled premium as shown in the Schedule may be paid while this policy is
in force prior to the policy anniversary nearest the younger insured's 100th
birth date. You may increase or decrease the amount of the scheduled premium,
subject to limits we may set and provisions in the Premium Limitation section.
Under conditions provided in the Grace Period provision and the Guarantee Period
provision you may be required to make premium payments to keep the policy in
force. You may pay premiums on a monthly basis through an automated payment
facility.
UNSCHEDULED PREMIUMS
You may make unplanned premium payments at any time the policy is in force prior
to the policy anniversary nearest the younger insured's 100th birth date,
subject to the Premium Limitation section. Unless you tell us otherwise, these
premium payments will first be applied to reduce or pay off any existing policy
loan and, as such, premium expense charges will not be deducted.
PREMIUM LIMITATION
We will refund any premium that causes your policy not to qualify as a life
insurance policy under the Internal Revenue Code. No premium may be paid after
the second death. No premium may be paid after the policy anniversary nearest
the younger insured's 100th birth date.
FAILURE TO PAY PREMIUM
If you stop paying premiums prior to the policy anniversary nearest the younger
insured's 100th birth date, your coverage may lapse. See your Grace Period
provision for details.
INITIAL PREMIUM ALLOCATION
If the initial period has not ended on the investment date, net premium amounts
designated for allocation to portfolios of the Separate Account will be
allocated on the investment date to the GCG Liquid Asset Portfolio and any net
premium amount designated for allocation to the Guaranteed Interest Division
will be allocated to that account. Any additional net premium amounts received
after the investment date and before the end of the initial period will be
allocated in the same manner as the initial net premium, at the end of the
valuation period during which we receive the premium at our Customer Service
Center. On the valuation date immediately following the end of the initial
period, the balance of the amount in the GCG Liquid Asset Portfolio will be
transferred to other portfolios of the Separate Account according to your
allocation instructions. The amounts allocated to the Guaranteed Interest
Division will remain in that division.
If the initial period has ended on the investment date, initial net premium
amounts will be allocated on the investment date to portfolios of the Separate
Account and/or to the Guaranteed Interest Division in accordance with your
allocation instructions.
SUBSEQUENT PREMIUM ALLOCATIONS
After the initial premium allocation, all future scheduled and unscheduled
premiums will be allocated to the portfolios of the Separate Account in
accordance with your allocation instructions. This allocation will occur at the
end of the valuation period during which we receive the premium at our Customer
Service Center.
CHANGES TO PREMIUM ALLOCATIONS
You may change your premium allocation in accordance with instructions included
in your annual policy prospectus.
Form 15287-00 9
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SEPARATE ACCOUNT PROVISIONS
THE SEPARATE ACCOUNT
The Separate Account is an account established by us, pursuant to the laws of
the State of Texas, to separate the assets funding the benefits for the class of
policies to which this policy belongs from the other assets of Southland Life
Insurance Company.
The Separate Account is registered as a unit investment trust under the
Investment Company Act of 1940. All income, gains and losses, whether or not
realized, from assets allocated to the Separate Account are credited to or
charged against the Separate Account without regard to income, gains or losses
of our General Account. The assets of the Separate Account are our property but
are separate from our General Account and our other Separate Accounts. That
portion of the assets of the Separate Account which is equal to the reserves and
other policy liabilities with respect to the Separate Account is not chargeable
with liabilities arising out of any other business we may conduct or subject to
creditor claims against us.
SEPARATE ACCOUNT DIVISIONS
The Separate Account is divided into divisions, each of which invests in a fund
portfolio designed to meet the objectives of the division. The current eligible
divisions are shown in your annual policy prospectus. We may, from time to time,
add additional divisions. If we do, you may be permitted to select from these
other divisions subject to the terms and conditions we may impose on those
allocations.
We reserve the right to limit the number of divisions in which you may invest
over the life of the policy. This limit, if any, will be listed in the updated
policy prospectus provided to you each year.
CHANGES WITHIN THE SEPARATE ACCOUNT
When permitted by law, and subject to any required notice to you and acceptance
of the Securities and Exchange Commission ("SEC"), and approval by state
regulatory authorities or policy owners, we may from time to time make the
following changes to the Separate Account:
o Make additional divisions available. These divisions will invest in
investment portfolios we find suitable for the policy.
o Eliminate divisions from the Separate Account or combine 2 or more
divisions.
o Substitute a new portfolio for the portfolio in which a division
invests. A substitution may become necessary if, in our judgment, a
portfolio no longer suits the purposes of the policy. This may happen
due to a change in laws or regulations, or a change in a portfolio's
investment objectives or restrictions. This may also happen if the
portfolio is no longer available for investment, or for some other
reason, such as a declining asset base.
o Transfer assets of the Separate Account, which we determine to be
associated with the class of policies to which your policy belongs, to
another Separate Account.
o Withdraw the Separate Account from registration under the Investment
Company Act of 1940.
o Operate the Separate Account as a management investment company under
the Investment Company Act of 1940.
Form 15287-00 10
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o Invest one or more divisions in a mutual fund other than, or in
addition to, the portfolios.
o Discontinue the sale of policies.
o Terminate any employer or plan trustee agreement with us pursuant to
its terms.
o Restrict or eliminate any voting rights as to the Separate Account.
o Make any changes required by the Investment Company Act of 1940 or the
rules or regulations thereunder.
GENERAL ACCOUNT PROVISIONS
THE GENERAL ACCOUNT
The General Account holds all of our assets other than those held in the
Separate Account or our other separate accounts. The Guaranteed Interest
Division is a part of our General Account.
GUARANTEED INTEREST DIVISION
The Guaranteed Interest Division or Account is another division to which you may
allocate premiums or make transfers. The account value of the Guaranteed
Interest Division is equal to amounts allocated to this division plus any earned
interest minus deductions taken from this division. Interest is credited at the
guaranteed rate shown in the schedule or may be credited at a higher rate. Any
higher rate is guaranteed to be in effect for at least a 12-month period.
LOAN DIVISION
The Loan Division is the account that is set aside to secure the policy loan, if
any. See the Loan Provisions section for information.
TRANSFER PROVISIONS
After the initial premium allocation and until the policy anniversary nearest
the younger insured's 100th birth date, your account value in each division may
be transferred to any other Division of the Separate Account or to the
Guaranteed Interest Division upon your request. One transfer from the Guaranteed
Interest Division into the separate account divisions may be made during the
first 30 days of each policy year. Additional limitations and requirements will
be listed in and governed by your annual policy prospectus in effect at the time
of the transfer. We reserve the right to modify these limitations and
requirements from time to time. On the policy anniversary nearest the younger
insured's 100th birth date, your account value in each division of the Separate
Account will be transferred into the Guaranteed Interest Division and no further
transfers will be allowed.
Form 15287-00 11
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ACCOUNT VALUE PROVISIONS
The account value is the sum of the current amounts allocated to the portfolios
of the Separate Account and to the Guaranteed Interest Division plus your
balance in the Loan Division.
The account value is based on premiums paid, policy and rider charges assessed,
loans and withdrawals taken, monthly deductions, premium expense charges,
transaction charges, any surrender charges, and the investment experience or
credited interest of the division to which your account value is allocated.
Your net account value is equal to your account value minus any policy loan and
accrued but unpaid loan interest.
ACCOUNT VALUES ON THE INVESTMENT DATE
The account value of each division of the Separate Account and the Guaranteed
Interest Division as of the investment date is equal to:
a) The allocation to that division of the first net premium paid; minus
b) The portion of any monthly deductions due on the investment date
allocated to that division.
ACCUMULATION UNIT VALUE
The investment experience of a division of the Separate Account is determined as
of each valuation date. We use an accumulation unit value to measure the
experience of each of the Separate Account divisions during a valuation period.
We generally set the accumulation unit value at $10 when each division is
opened. The accumulation unit value for a valuation date equals the accumulation
unit value for the preceding valuation date multiplied by the accumulation
experience factor defined below for the valuation period ending on the valuation
date.
The number of units for a given transaction related to a division of the
Separate Account as of a valuation date is determined by dividing the dollar
value of that transaction by that division's accumulation unit value for that
date.
ACCUMULATION EXPERIENCE FACTOR
For each portfolio of the Separate Account, the accumulation experience factor
reflects the investment experience of the portfolio in which that division
invests and the charges assessed against that division for a valuation period.
The accumulation experience factor is calculated as follows:
a) The net asset value of the portfolio in which that division invests as
of the end of the current valuation period; plus
b) The amount of any dividend or capital gains distribution declared and
reinvested in the portfolio in which that division invests during the
current valuation period; minus
c) A charge for taxes, if any.
d) The result of (a), (b) and (c) is then divided by the net asset value
of the portfolio in which that division invests as of the end of the
preceding valuation period.
e) The daily equivalent of the annual mortality and expense risk charge
shown in the Schedule for each day in the current valuation period is
then subtracted from the result obtained in (d).
Form 15287-00 12
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ACCOUNT VALUE OF THE DIVISIONS OF THE SEPARATE ACCOUNT
On subsequent valuation dates after the investment date, your account value of
each portfolio of the Separate Account is calculated as follows:
a) The number of accumulation units in that division as of the beginning
of the current valuation period multiplied by that division's
accumulation unit value for the current valuation period; plus
b) Any additional net premiums allocated to that division during the
current valuation period; plus
c) Any account value transferred to or minus any account value transferred
from the Separate Account during the current valuation; minus
d) Any partial withdrawals allocated to that division and any applicable
withdrawal service fees which are allocated to the divisions of the
Separate Account during the current valuation period; plus
e) Any amounts released from the Loan Division as a result of a loan or
loan interest payment, or minus amounts transferred to the Loan
Division as a result of any loans which are allocated to the Separate
Account during the current valuation period; minus
f) The portion of any surrender charge resulting from a decrease in stated
death benefit allocated to the division; minus
g) The portion of the monthly deduction allocated to the Separate Account,
if a monthly processing date occurs during the current valuation
period.
ACCOUNT VALUE OF THE GUARANTEED INTEREST DIVISION
On valuation dates after the investment date, your account value of the
Guaranteed Interest Division is calculated as follows:
a) The account value of the Guaranteed Interest Division at the end of the
preceding valuation period plus interest at the declared rate credited
during the current valuation period; plus
b) Any additional net premiums allocated to the Guaranteed Interest
Division plus interest credited to these premiums during the current
valuation period; plus
c) Any account value transferred to or minus any account value transferred
from the Guaranteed Interest Division during the current valuation
period; minus
d) Any partial withdrawals taken and any applicable withdrawal service
fees which are allocated to the Guaranteed Interest Division during the
current valuation period; plus
e) Any amounts released from the Loan Division as a result of a loan or
loan interest payment, or minus amounts transferred to the Loan
Division as a result of any loans which are allocated to the Guaranteed
Interest Division during the current valuation period; minus
f) The portion of any surrender charge resulting from a decrease in stated
death benefit allocated to the Guaranteed Interest Division; minus
g) The portion of the monthly deduction allocated to the Guaranteed
Interest Division, if a monthly processing date occurs during the
current valuation period.
ACCOUNT VALUE OF THE LOAN DIVISION
On valuation dates after the investment date, your account value of the Loan
Division is equal to:
a) The account value of the Loan Division on the prior valuation date;
plus
b) Any interest credited to the Loan Division during the valuation period;
plus
c) An amount equal to any additional loans since the prior valuation date;
minus
d) Any loan repayments, including payment of loan interest; plus
Form 15287-00 13
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e) The amount of accrued loan interest if the valuation date is a policy
anniversary; minus
f) The amount of interest credited to the Loan Division during the year if
the valuation date is a policy anniversary.
On policy anniversaries, any amount of interest credited to the Loan Division
during the year is transferred from the Loan Division to the Separate Account
and Guaranteed Interest Division according to your premium allocation then in
effect.
MONTHLY DEDUCTION AND REFUND
MONTHLY DEDUCTION
The monthly deduction is equal to:
a) The cost of insurance charges for this policy; plus
b) The monthly charges for any other additional benefits provided by
riders in force under the policy; plus
c) The monthly expense charges shown in the Schedule; plus
d) The charge for the Guaranteed Minimum Death Benefit option, if elected;
plus
e) The policyholder transaction charges as described in the Schedule as
applicable.
The monthly deductions are allocated to the divisions of the Separate Account
and Guaranteed Interest Division as described in the prospectus in effect at the
time of the transaction. This deduction is taken from your account value as of
the monthly processing date. These deductions will display in periodic reports
that we send you at least once per policy year. After the policy anniversary
nearest the younger insured's 100th birth date no further monthly deductions
will be made, except policy transaction charges incurred after this date.
Policyholder transaction charges, as described in the Schedule, are deducted at
the time of the applicable transaction.
COST OF INSURANCE
The cost of insurance for the policy is the sum of the cost of insurance for all
segments. A segment's cost of insurance is the cost of insurance rate for the
premium class for the segment multiplied by the net amount at risk allocated to
the segment. It is determined on a monthly basis.
The net amount at risk is (a) minus (b) where:
a) Is the base death benefit for all segments as of the monthly processing
date after the monthly deductions (other than cost of insurance charges
for the base death benefit, any Adjustable Term Insurance Rider and any
Single Life Term Insurance Rider), divided by the result of 1 plus the
monthly equivalent of the guaranteed interest rate for the Guaranteed
Interest Division as shown in the Schedule; and
b) Is your account value as of the monthly processing date after the
monthly deductions (other than the cost of insurance charges for the
base death benefit, any Adjustable Term Insurance Rider and any Single
Life Term Insurance Rider).
The net amount at risk will be allocated to a segment in the same proportion as
that segment's stated death benefit bears to the sum of the stated death
benefits for all segments.
Form 15287-00 14
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The cost of insurance rate for each segment will be determined by us from time
to time. Different rates will apply to each segment. They will be based on the
gender and age of each of the insureds, as of the effective date of segment
coverage, the duration since the coverage began, the amount of target death
benefit and the segment premium classes. Any change in rates will apply to all
individuals of the same premium class and whose policies have been in effect for
the same length of time. The rates will never exceed those rates shown in the
Table of Guaranteed Rates for the segment. These tables are in the Schedule.
PERSISTENCY REFUND
We will calculate a monthly persistency refund by multiplying the monthly
persistency refund factor times the account value allocated to the Loan Division
and portfolios of the Separate Account. The persistency refund factor is shown
in the Schedule. We may also increase this persistency refund based on the
amount in the Guaranteed Interest Division.
Each month after the policy is in force for 120 months, we will credit the net
account value held in the portfolios of the Separate Account and the Loan
Division with a persistency refund. We may also credit the net account value
held in the Guaranteed Interest Division with a persistency refund. The monthly
persistency refund will be allocated to the divisions of the Separate Account
and the Guaranteed Interest Division in the same proportion that your account
value in each division bears to your net account value as of the monthly
processing date.
LOAN PROVISIONS
POLICY LOANS
You may obtain a policy loan on or after the first monthly processing date. The
maximum amount you may borrow at any time equals the net cash surrender value on
the date of the loan request less all monthly deductions to the next policy
anniversary, or 13 monthly deductions if you take a loan within the 30-day
period before your next policy anniversary. The policy loan is a first lien on
your policy. The minimum amount you may borrow is shown in the Schedule. The
outstanding policy loan amount is equal to the loan amount as of the beginning
of the policy year plus new loans and minus loan repayments, plus accrued
interest.
PREFERRED POLICY LOANS
Preferred loan eligibility begins after the tenth (10th) policy anniversary. The
first loan requested during each year of preferred loan eligibility will be a
preferred loan. The amount of the preferred loan cannot exceed 10% of the net
account value. The preferred loan interest rate is shown in the Schedule.
Only one preferred loan may be requested in an eligible policy year. If the
preferred loan amount in any eligible policy year is less than the maximum
allowed, the balance may not be carried over to increase the eligible preferred
loan amount in a subsequent policy year.
Beginning with the 21st policy year, all loan balances will be preferred loan
amounts.
Policy Form 15287-00 15
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LOAN INTEREST
The annual policy loan interest rates are shown in the Schedule. If a loan is
made, interest is due and payable at the end of the policy year. Thereafter,
interest on the loan amount is due annually at the end of each policy year until
the loan is repaid. If interest is not paid when due, it is added to the policy
loan.
If the policy loan amount and any accrued interest equals or exceeds the cash
surrender value, a premium sufficient to keep this policy in force must be paid
as provided in the Grace Period provision.
LOAN DIVISION
When a policy loan is taken or when interest is not paid in cash when due, an
amount equal to the loan or unpaid loan interest respectively, is transferred
from the portfolios of the Separate Account and the Guaranteed Interest Division
to the Loan Division to secure the loan. This amount will be deducted from the
portfolios of the Separate Account and the Guaranteed Interest Division in the
same proportion that your account value in each division bears to your net
account value as of the date the transfer is effective unless otherwise
specified in your instructions to us. Your account value in the Loan Division
will be credited with interest at the interest rate for the Loan Division shown
in the Schedule.
When a loan repayment is made, an amount equal to the repayment is transferred
from the Loan Division to the Guaranteed Interest Division and the portfolios of
the Separate Account in the same proportion as your current premium allocation
unless you request a different allocation in writing.
PARTIAL WITHDRAWAL PROVISIONS
You may apply for a partial withdrawal from your account value on any monthly
processing date after the first policy anniversary by writing to us at our
Customer Service Center. The minimum and maximum partial withdrawal amounts are
shown in the Schedule. When we process a partial withdrawal, the amount of the
withdrawal plus a service fee is deducted from your account value. The amount of
the service fee is shown in the Schedule. If a surrender charge is applicable,
we will deduct it from your account value. We limit the number of partial
withdrawals in a policy year. This number is shown in the Schedule.
The stated death benefit is reduced by the amount of the partial withdrawal
unless one of the following exceptions applies.
The stated death benefit is not reduced by a partial withdrawal taken when
the base death benefit has been increased to qualify your policy as life
insurance under the Internal Revenue Code and the amount withdrawn is not
greater than that which reduces your account value to the level which no
longer requires the base death benefit to be increased for Internal
Revenue Code purposes.
For a policy under an Option A death benefit, the stated death benefit is
not reduced by a partial withdrawal:
a) If no more than 15 years have elapsed since the policy date;
b) If the joint equivalent age is not yet age 81; and
c) If the partial withdrawal taken is less than either the greater of
10% of your account value or 5% of the stated death benefit,
calculated immediately before the partial withdrawal. Any
additional amount withdrawn reduces your stated death benefit by
that additional amount.
Form 15287-00 16
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For a policy under an Option B death benefit, a partial withdrawal does
not reduce your stated death benefit.
If the stated death benefit is reduced by a partial withdrawal during the first
14 years following the policy date or following an increase in the stated death
benefit, a surrender charge will be deducted from your account value. (See your
Surrender Charges provision.)
Any reduction in death benefit or account value will occur as of the date the
partial withdrawal occurs.
We will limit the amount of the partial withdrawal such that, immediately after
the requested withdrawal:
a) The stated death benefit is at least $250,000 if there is no adjustable
term insurance on the policy.
b) If there is adjustable term insurance on the policy, the stated death
benefit is at least $100,000 and the target death benefit is at least
$250,000.
You may specify how much of the withdrawal you wish taken from each division of
the Separate Account or from the Guaranteed Interest Division. You may not
withdraw from the Guaranteed
Interest Division more than the total withdrawal times the ratio of your account
value in the Guaranteed Interest Division to your net account value immediately
prior to the withdrawal. Unless you indicate otherwise, we will make the
withdrawal from the amounts in the Guaranteed Interest Division and the
portfolios of the Separate Account in the same proportion that your account
value in each division bears to your net account value immediately prior to the
withdrawal. The withdrawal service fee and any surrender charge deducted from
your account value are deducted from each division of the Separate Account and
the Guaranteed Interest Division as described in the prospectus in effect at the
time of the transaction.
We may send you a new Schedule to reflect the effect of the withdrawal if there
is any change to the stated death benefit and surrender charges. We may ask you
to return your policy to our Customer Service Center to make this change. The
withdrawal and the reductions in death benefits will be effective as of the
valuation date after we receive your request.
SURRENDER PROVISIONS
SURRENDER VALUE
The cash surrender value on any date will be your account value minus any
applicable surrender charge and minus any policy loan including accrued but
unpaid loan interest.
SURRENDER CHARGES
A separate surrender charge may apply to each stated death benefit segment for
each policy year. The surrender charge for this policy is the sum of the
surrender charge for each segment of stated death benefit. The surrender charge
is shown in the Schedule.
Upon a decrease in the stated death benefit, a portion of the surrender charge
will be deducted from your account value, unless the stated death benefit is
decreased because the death benefit option is changed.
Form 15287-00 17
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The amount we deduct will equal the applicable surrender charge for the policy
year of the decrease times the percentage reduction in the stated death benefit.
The surrender charges after the decrease will equal the surrender charges shown
in the Schedule less the amount deducted from your account value. If the amount
deducted from your account value causes your net cash surrender value to become
zero or less, you may enter the grace period. (See Grace Period provision.)
We will send you a new Schedule to reflect the effect of any transaction that
changes the stated death benefit or the surrender charges.
BASIS OF COMPUTATIONS
The cash surrender value under the policy is not less than the minimums required
as of the policy date by the state in which your policy was delivered. A
detailed statement of the method of computation of policy values under the
policy has been filed with the insurance department of the state in which the
policy was delivered, if required.
FULL SURRENDERS
You may surrender your policy after the Right to Examine Period or at any time
before the second death and receive the net cash surrender value. We will
compute the net cash surrender value as of the next valuation date after we
receive both your request and the policy at our Customer Service Center. This
policy will be canceled as of the date we receive your request, and there will
be no further benefits under this policy. Once you surrender this policy, it
cannot be reinstated.
GRACE PERIOD, TERMINATION AND REINSTATEMENT PROVISIONS
GRACE PERIOD
If the following three conditions occur on a monthly processing date, the policy
will enter into a 61-day grace period:
a) The net cash surrender value is zero or less; and
b) The special continuation period described below has expired or the
required premium for the special continuation period has not been paid;
and
c) The guarantee period described below was not elected, has expired or
been terminated.
We will give you a 61-day grace period from this monthly processing date to make
the required premium payment. The required premium payment then due must be paid
to keep the policy in force. If this amount is not received in full by the end
of the grace period, the policy will lapse without value. The required premium
payment will be equal to past due charges plus an amount we expect to be
sufficient to keep the policy and any riders in force for 2 months following
receipt of the required premium payment. If we receive at least the required
premium payment during the grace period, we will apply the net premium payment
to the policy and make deductions for the past due amounts.
Notice of the amount of the required premium payment will be mailed to you or
any assignee at the last known address at least 30 days before the end of the
grace period. If the second death occurs during the grace period, we will deduct
any overdue monthly charges from the death proceeds of the policy.
Form 15287-00 18
<PAGE>
SPECIAL CONTINUATION PERIOD
During the first 5 policy years your policy will remain in force regardless of
the net cash surrender value if, on a monthly processing date, the sum of your
premiums paid minus the sum of your partial withdrawals, policy loans and
accrued but unpaid policy loan interest is not less than the sum of the
applicable minimum monthly premiums for each policy month starting with the
first policy month to and including the policy month which begins on the current
monthly processing date. Each minimum monthly premium equals 1/12 of the minimum
annual premium. The minimum annual premium is shown in the Schedule. We use this
premium for each policy month until the effective date of a change in the stated
death benefit. If there is a change, the new Schedule will show the applicable
minimum annual premium that applies to subsequent policy months during the
remainder of the 5-year period.
If the policy is kept in force under this provision, the charges are not
permanently waived. Instead, the charges continue to be deducted. This could
result in a negative net cash surrender balance unless sufficient premium is
received. This negative balance is your unpaid monthly deductions. At the end of
the special continuation period, sufficient premium to bring your net cash
surrender balance to zero will be due.
GUARANTEE PERIOD
If you elect the Guaranteed Minimum Death Benefit option, the policy will not
terminate during the guarantee period even if the net account value is zero
except as provided below. When your policy is kept in force under this option,
all riders will terminate.
Each monthly guarantee period premium equals 1/12 of the guarantee period annual
premium. The guarantee period annual premium is shown in the Schedule. We use
this premium for each policy year until the effective date of a change in the
stated death benefit. If there is a change, a new Schedule will show the
applicable minimum guarantee period annual premium that applies to subsequent
policy months.
The guarantee period will expire on the policy anniversary nearest the younger
insured's 100th birth date. The guarantee period will terminate prior to the
guarantee period expiration date if, on any monthly processing date, the actual
premiums paid (minus the amount of any partial withdrawals and any policy loan
including accrued but unpaid interest) are less than the sum of the guarantee
monthly premiums for each policy month starting with the first policy month to,
and including, the policy month that begins on the current monthly processing
date.
The guarantee period will also terminate if your account value, on any monthly
processing date, is not diversified. Diversification requires that no more than
35% of your net account value is invested in any one division, and that your net
account value is invested in at least 5 divisions.
You will satisfy these diversification requirements if: (i) you are
participating in the automatic rebalancing feature defined in and governed by
the policy prospectus in effect on the policy effective date and your automatic
rebalancing allocations comply with the diversifications specified above; or
(ii) you elect dollar cost averaging and direct the resulting transfers into at
least four other divisions with no more than 35% of any transfer going to any
one division.
If, at the end of the guarantee period, the net account value of your policy is
negative, your policy will terminate without value. The charge for this option
is shown in the Schedule. Once the guarantee period has terminated, it cannot be
reinstated.
Form 15287-00 19
<PAGE>
TERMINATION
All coverage provided by this policy will end as of the earliest of:
a) The date the policy is surrendered;
b) The date of the second death; or
c) The date the grace period ends without payment of the required premium.
REINSTATEMENT
The policy and its riders may be reinstated within five years after the
beginning of the grace period. The reinstatement will be effective as of the
monthly processing date on or next following the date we approve your written
application.
We will reinstate the policy and any riders if the following conditions are met:
a) You have not surrendered the policy for its net cash surrender value;
b) You submit evidence satisfactory to us that the insureds and those
insured under any riders are still insurable according to our normal
rules of underwriting for the applicable underwriting class for this
type of policy; and
c) We receive payment of the amount of premium sufficient to keep the
policy and any riders in force from the beginning of the grace period
to the end of the expired grace period and for 2 months after the date
of reinstatement. We will let you know, at the time you request
reinstatement, the amount of premium needed for this purpose.
The surrender charge as of the date of reinstatement will equal the surrender
charge as of the beginning of the grace period. We will reinstate any policy
loan, with accrued loan interest to the end of the grace period, which existed
when coverage ended.
Upon reinstatement, the net premium received minus past due amounts will be
allocated to the portfolios of the Separate Account and the Guaranteed Interest
Division according to the premium allocation percentages in effect at the start
of the grace period or as directed by you in writing at the time of
reinstatement.
DEFERRAL OF PAYMENT
Requests for transfers, withdrawals, policy loans or payment of proceeds for a
full surrender will be mailed within 7 days of receipt of the request in a form
acceptable to us. However, we may postpone the processing of any such Separate
Account transactions for any of the following reasons:
a) The New York Stock Exchange (NYSE) is closed, other than customary
weekend and holiday closings.
b) Trading on the NYSE is restricted by the Securities and Exchange
Commission (SEC).
c) The SEC declares that an emergency exists as a result of which disposal
of securities in the Separate Account is not reasonably practicable to
determine your account value in the divisions.
d) A governmental body having jurisdiction over the Separate Account by
order permits such suspension.
Rules and regulations of the SEC, if any, are applicable and will govern as to
whether conditions described in (b), (c), or (d) exist.
Form 15287-00 20
<PAGE>
Death proceeds will be paid within 7 days of determination of the proceeds and
are not subject to deferment. We may defer for up to 6 months payment of any
surrender proceeds, withdrawal or loan amounts from the Guaranteed Interest
Division.
GENERAL POLICY PROVISIONS
THE POLICY
The policy, including the original application and applications for any
increases, decreases, riders, endorsements, any Schedule pages, and any
reinstatement applications make up the entire contract between you and us. A
copy of the original application will be attached to the policy at issue or at
delivery. A copy of any application as well as a new Schedule will be attached
or furnished to you for attachment to the policy at the time of any change in
coverage. In the absence of fraud, all statements made in any application will
be considered representations and not warranties. No statement will be used to
deny a claim unless it is in an application.
CONTRACT CHANGES
All changes made by us must be signed by our president or an officer and by our
secretary or assistant secretary. No other persons can change any of this
policy's terms and conditions.
PROCEDURES
We must receive any election, designation, assignment or any other change
request you make in writing, except those specified on the application. It must
be in a form acceptable to us. We may require a return of the policy for any
change or for a full surrender. We are not liable for any action we take before
we receive and record the written request at our Customer Service Center.
In the event of the death of an insured, please let us or our agent know as soon
as possible. This includes the first and second death. Upon notification to us
or our agent, instructions will be sent to you or the beneficiary immediately.
We may require proof of age and a certified copy of the death certificate. We
may require the beneficiary and next of kin to sign authorizations as part of
due proof. These authorization forms allow us to obtain information about the
decedent, including, but not limited to, medical records of physicians and
hospitals used by the decedent. Settlement will be made upon receipt of due
proof of death.
OWNERSHIP
The original owner is the person or entity named as the owner in the
application. You, as the owner, can exercise all rights and receive the benefits
until the second death. This includes the right to change the owner,
beneficiaries, and methods for the payment of proceeds. All rights of the owner
are subject to the rights of any assignee and any irrevocable beneficiary.
You may name a new owner by sending written notice to us. The effective date of
the change to the new owner will be the date you sign the notice. The change
will not affect any payment made or action taken by us before recording the
change at our Customer Service Center.
Form 15287-00 21
<PAGE>
BENEFICIARIES
The primary beneficiary surviving the second death will receive any death
proceeds which become payable. Surviving contingent beneficiaries are paid death
proceeds only if no primary beneficiary has survived the second death. If more
than one beneficiary in a class survives the second death, they will share the
death proceeds equally, unless your designation provides otherwise. If there is
no designated beneficiary surviving, you or your estate will be paid the death
proceeds. The beneficiary designation will be on file with us or at a location
designated by us. Until the second death, you may name a new beneficiary. The
effective date of the change will be the date the request was signed. We will
pay proceeds to the most recent beneficiary designation on file. We will not be
subject to multiple payments.
EXCHANGE RIGHT
If, for any reason within the first 2 policy years you want to exchange this
policy for a policy in which values do not vary with the investment experience
of the Separate Account, we will exchange this policy. The exchange will be
implemented by transferring your account value in all the portfolios of the
Separate Account to the Guaranteed Interest Division and by removing your future
right to choose to allocate funds to the portfolios of the Separate Account.
This transfer will not be subject to the excess transfer charge. We will require
a return of this policy before this change will be processed.
POLICY SPLIT
This benefit is available unless any segment rating on either insured is higher
than 3.0 times the standard premium class. Any rating is shown on the Schedule.
If this benefit is available, you may exchange this policy for two individual
policies, upon the occurrence of at least one of the contingent events listed
below. The exchange must be to two single whole life or flexible premium
universal life policies of the kind made available by us for exchange. One
policy will be on Insured #1 and the other policy will be on Insured #2. No
evidence of insurability will be required.
On the effective date of the exchange, you must split the available death
benefit provided by this policy between the two single life policies. The
maximum you may allocate to each single life policy is 50% of the available
death benefit. The sum of the face amounts of two single life policies cannot
exceed the available death benefit; however, there is no requirement that the
maximum available amount on each life be used. The available death benefit is
the amount of base death benefit plus any term insurance provided by the
Adjustable Term Insurance Rider on the effective date of the exchange.
The policy split may be exercised upon the occurrence of any of the following
contingent events:
a) Three months following the effective date of a final divorce decree
with respect to the marriage of the two insureds.
b) The effective date of a change to Federal Estate Tax Law which results
in either:
1) Removal of the unlimited marital deduction provision; or
2) A reduction in the current maximum Federal Estate Tax of at least
50% after the policy effective date.
c) The effective date of a dissolution of any business which is being
conducted or owned by the two insureds covered under this policy at the
time this policy is issued.
You must send us written notice of your election to split the policy within 180
days following the occurrence of any contingent event. Your notice must provide
satisfactory evidence to us that the
Form 15287-00 22
<PAGE>
contingent event has occurred. The insurance under the two individual policies
will start on the effective date of the exchange only if both insureds are alive
on the effective date of the exchange. The new policies will not provide any
insurance until such time. If either insured is not alive on that date, the
exchange shall be void.
The effective date of the exchange will be the first monthly processing date
after we have approved the exchange.
The premiums under each new policy will be based on each insured's attained age,
gender and premium class at the time of the split. Premiums will be due for each
new policy in accordance with the terms of the new policy as of the effective
date of the exchange. The surrender value of the old policy will be allocated to
the new policies in the same proportion that the face amount was divided between
the two policies unless we agree to a different allocation. Such allocation will
be made to each new policy on the effective date of the exchange. If such
allocation would cause an increase in the face amount of the new policy, we
reserve the right to limit the amount of surrender value that may be applied to
the new policies. Any remaining surrender value will be paid to you in cash.
Any loan on the policy will be divided and transferred to each new policy in the
same proportion as the cash value is apportioned. Any remaining outstanding loan
balance must be paid in cash prior to the effective date of the exchange. Any
assignee must agree to the exchange. Any assignment of the policy will apply to
each new policy.
If there is a Single Life Term Insurance Rider on the original policy on the
date of the exchange, you may have a term insurance rider insuring that life on
the new policy if such a rider is available on the new policy. The amount of the
insurance cannot be more than the amount under the Single Life Term Insurance
Rider on that life under the original policy. Any other riders on the new
policies are subject to availability and satisfactory evidence of insurability.
This policy provision ends on the earliest of:
a) The policy anniversary nearest the younger insured's 100th birth date;
or
b) The death of the first of the two insureds; or
c) The expiration of the grace period of the policy; or
d) The termination or surrender of the policy.
COLLATERAL ASSIGNMENT
You may assign this policy as collateral security by written notice to us. Once
it is recorded with us, the rights of the owner and beneficiary are subject to
the assignment. It is your responsibility to make sure the assignment is valid.
INCONTESTABILITY
After this policy has been in force while both insureds are alive for 2 years
from the policy date, we will not contest the statements in the application
attached at issue.
After this policy has been in force while both insureds are alive for 2 years
from the effective date of any new segment or from the effective date of an
increase in any other benefit, we will not contest the statements in the
application for the new segment or other increase.
After this policy has been in force while both insureds are alive for 2 years
from the effective date of any reinstatement, we will not contest the statements
in the application for such reinstatement.
Form 15287-00 23
<PAGE>
MISSTATEMENT OF AGE OR GENDER
If either insured's age or gender has been misstated, the death benefit will be
adjusted. The death benefit will be that which the cost of insurance, which was
deducted from your account value on the last monthly processing date prior to
the second death of the two insureds, would have purchased for the insured's
correct age and gender. If the death benefit adjustment is made prior to the
second death, the adjusted benefit will be to an equitable amount determined by
us. This adjustment will reflect the death benefit for the correct age or
gender.
SUICIDE EXCLUSION
If either insured commits suicide, while sane or insane, within 2 years of the
policy date, we will make a limited payment to the beneficiary. We will pay in
one sum the amount of all premiums paid to us during that time, minus any
outstanding policy loan (including accrued but unpaid interest) and partial
withdrawals. Coverage under the policy and all riders will then terminate.
If either insured commits suicide, while sane or insane, within 2 years of the
effective date of a new segment or of an increase in any other benefit, we will
make a limited payment to the beneficiary for the new segment or other increase.
This payment will equal the cost of insurance and any applicable monthly expense
charges deducted for such increase. Coverage under that segment will then
terminate.
PERIODIC REPORTS
We will send you, without charge, at least once each year a report that shows
the current account value, net cash surrender value and premiums paid since the
last report. The report will also show the allocation of your account value as
of the date of the report and the amounts added to or deducted from your account
value of each division since the last report. The report will include any other
information that may be currently required by the insurance supervisory official
of the jurisdiction in which this policy is delivered.
ILLUSTRATION OF BENEFITS AND VALUES
We will send you, upon written request, a hypothetical illustration of future
death benefits and account values. This illustration will include the
information as required by the laws or regulations where this policy is
delivered. If you request more than one illustration during a policy year, we
reserve the right to charge a reasonable fee for each additional illustration.
The maximum amount of this fee is shown in the Schedule.
NONPARTICIPATING
The policy does not participate in our surplus earnings.
CUSTOMER SERVICE CENTER
Our Customer Service Center is at the address shown in the Schedule. Unless you
are otherwise notified:
a) All requests and payments should be sent to us at our Customer Service
Center; and
b) All transactions are effective as of the valuation date the required
information is received at our Customer Service Center.
Form 15287-00 24
<PAGE>
PAYOUTS OTHER THAN AS ONE SUM
ELECTION
Before the second death, you may elect to have the beneficiary receive the
proceeds other than in one sum. If you have not made an election, the
beneficiary may do so within 60 days after we receive due proof satisfactory to
us of the second death. You may also elect to take the net cash surrender value
of the policy upon its surrender other than in one sum. Satisfactory written
request must be received at our Customer Service Center before payment can be
made. A payee that is not a natural person may not be named without our consent.
The various methods of settlement are described in the following Payout Options
section.
PAYOUT OPTIONS
OPTION I. PAYOUTS FOR A DESIGNATED PERIOD. Payouts will be made in annual,
semi-annual, quarterly or monthly installments per year as elected for a
designated period, which may be 5 to 30 years. The installment dollar
amounts will be equal except for any excess interest as described below.
The amount of the first monthly payout for each $1,000 of account value
applied is shown in Settlement Option Table I.
OPTION II. LIFE INCOME WITH PAYOUTS FOR A DESIGNATED PERIOD. Payouts will
be made in annual, semi-annual, quarterly or monthly installments per year
throughout the payee's lifetime, or if longer, for a period of 5, 10, 15 or
20 years as elected. The installment dollar amounts will be equal except
for any excess interest as described below. The amount of the first monthly
payout for each $1,000 of account value applied is shown in Settlement
Option Table II. This option is available only for ages shown in the table.
Payouts for Payout Option II will be determined by using the 1983
Individual Annuity Mortality Table for the appropriate Gender at 3 1/2%
interest.
OPTION III. HOLD AT INTEREST. Amounts may be left on deposit with us to be
paid upon the death of the payee or at any earlier date elected. Interest
on any unpaid balance will be at the rate declared by us or at any higher
rate required by law. Interest may be accumulated or paid in 1, 2, 4, or 12
installments per year, as elected. Money may not be left on deposit for
more than 30 years.
OPTION IV. PAYOUTS OF A DESIGNATED AMOUNT. Payouts will be made until
proceeds, together with interest which will be at the rate declared by us
or at any higher rate required by law, are exhausted. Payouts will be made
in annual, semi-annual, quarterly or monthly equal installments per year,
as elected.
OPTION V. OTHER. Settlement may be made in any other manner as agreed
upon in writing between you (or the beneficiary) and us.
CHANGE AND WITHDRAWAL
You may change an election at any time before the second death. If you have
given the beneficiary the right to make changes or withdrawals, or if the
beneficiary has elected the option, the beneficiary (as primary payee) may take
the actions below.
a) Changes may be made from Payout Options I, III, and IV to another
option.
b) Full withdrawals may be made under Payout Option III or IV. Partial
withdrawals of not less than $300 may be made under Payout Option III.
Form 15287-00 25
<PAGE>
c) Remaining installments under Payout Option I may be commuted at 3 1/2%
interest and received in one sum.
d) Changes in any contingent payee designation may be made.
A written request must be sent to our Customer Service Center in writing to make
a change or withdrawal. We also may require that you send in the supplementary
policy. We may defer payment of commuted and withdrawable amounts for a period
up to 6 months.
EXCESS INTEREST
If we declare that Payout Options are to be credited with an interest rate above
that guaranteed, it will apply to Payout Options I, II, III, and IV. The
crediting of excess interest for one period does not guarantee the higher rate
for other periods. Any declared interest rate will be in effect for at least 12
months.
MINIMUM AMOUNTS
The minimum amount which may be applied under any option is $2,000. If the
payments to the payee are ever less than $20, we may change the frequency of
payments so as to result in payments of at least that amount.
SUPPLEMENTARY POLICY
When a payout option becomes effective, the policy will be surrendered in
exchange for a supplementary policy. It will provide for the manner of
settlement and rights of the payees. The supplementary policy's effective date
will be the date of the second death or the date of other settlement. The first
payment under Options I, II, and IV will be payable as of the effective date.
The first interest payment under Option III will be made as of the end of the
interest payment period elected. Subsequent payments will be made in accordance
with the frequency of payment elected. The supplementary policy may not be
assigned or payments made to another without our consent.
INCOME PROTECTION
Unless otherwise provided in the election, a payee does not have the right to
commute, transfer or encumber amounts held or installments to become payable. To
the extent provided by law, the proceeds, amount retained, and installments are
not subject to any payee's debts, policies, or engagements.
DEATH OF PRIMARY PAYEE
Upon the primary payee's death, any payments certain under Option I or II,
interest payments under Option III, or payments under Option IV will be
continued to the contingent payee; or, amounts may be released in one sum if
permitted by the policy. The final payee will be the estate of the last to die
of the primary payee and any contingent payee.
PAYMENTS OTHER THAN MONTHLY
The tables that follow show monthly installments for Options I and II. To arrive
at annual, semiannual, or quarterly payments, multiply the appropriate figures
by 11.813, 5.957 or 2.991 respectively. Factors for other periods certain or for
other options that may be provided by mutual agreement will be provided upon
reasonable request.
Form 15287-00 26
<PAGE>
THIS IS A NON-PARTICIPATING POLICY
THIS POLICY IS A LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
THIS POLICY INCLUDES PERSISTENCY BONUS.
DEATH BENEFITS AND OTHER VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE. THESE VALUES MAY
INCREASE OR DECREASE BASED ON INVESTMENT EXPERIENCE AND ARE NOT GUARANTEED AS TO
A FIXED DOLLAR AMOUNT. DEATH BENEFITS ARE PAYABLE BY US UPON THE SECOND DEATH OF
THE TWO INSUREDS. THERE IS NO MATURITY DATE. FLEXIBLE PREMIUMS ARE PAYABLE BY
YOU DURING THE LIFETIME OF EITHER INSURED UNTIL THE POLICY ANNIVERSARY NEAREST
THE YOUNGER INSURED'S 100TH BIRTH DATE.
TO OBTAIN INFORMATION OR MAKE A COMPLAINT, CONTACT
SOUTHLAND LIFE INSURANCE COMPANY
Customer Service Center
P. O. Box 173789
Denver, Colorado 80217-3789
Toll Free Number: 1(800)224-3035
SOUTHLAND LIFE INSURANCE COMPANY
A Stock Company
Form 15287-00
